Believe those who are seeking the truth. Doubt those who find it. Andre Gide

Friday, September 3, 2010

Tom Sargent Speaks

Arthur J. Rolnick (Director of Research at the Minneapolis Fed, 1985-2010) recently interviewed Thomas J.Sargent on a range of issues, including the criticisms levelled at modern macroeconomic theory. Here is the opening bit, which I found rather amusing:

Modern macroeconomics under attack

Rolnick: You have devoted your professional life to helping construct and teach modern macroeconomics. After the financial crisis that started in 2007, modern macro has been widely attacked as deficient and wrongheaded.

Sargent: Oh. By whom?

Rolnick: For example, by Paul Krugman in the New York Times and Lord Robert Skidelsky in the Economist and elsewhere. You were a visiting professor at Princeton in the spring of 2009. Along with Alan Blinder, Nobuhiro Kiyotaki and Chris Sims, you must have discussed these criticisms with Krugman at the Princeton macro seminar.

Sargent: Yes, I was at Princeton then and attended the macro seminar every week. Nobu, Chris, Alan and others also attended. There were interesting discussions of many aspects of the financial crisis. But the sense was surely not that modern macro needed to be reconstructed. On the contrary, seminar participants were in the business of using the tools of modern macro, especially rational expectations theorizing, to shed light on the financial crisis.

Rolnick: What was Paul Krugman’s opinion about those Princeton macro seminar presentations that advocated modern macro?

Sargent: He did not attend the macro seminar at Princeton when I was there.

7 comments:

It's telling -- at least about your KDS -- that you think this is the most important thing to highlight in the article.

Me, I think the substance of what Sargent said about macro is far more important than a swipe at Krugman, but I guess Krugman hurt some feelings or something. Whatever. Hope y'all get over it soon, and stop taking the bait in the future. I'd really like to hear your thoughts on macro instead of this stuff.

Aw, heck, Mark, I just thought I'd give readers a teaser by giving them the opening snippet. But I do plead guilty of being annoyed with PK's gratuitous swipes at respected members of our profession (with nary a peep of protest from anyone). I'm not sure why I should be held to higher standards than him, but I'm glad that you think it should be so! I'll try to do better.

Needless to say, I do not believe that the opening bit was anything other than amusing. It is the rest of the interview that is worth reading.

As an outsider (of Economics), this is a very interesting interview. Rational Expectations just seems wrong at first blush, but when you really consider it thoroughly, it's very hard to discount it as a methodological approach. At least I haven't seen any critiques that aren't incoherent.

Hey, an excellent article and thanks for posting it. As an aside, I especially liked the multiple photos of Sargent because he uses his hands a lot when he's speaking. It's funny, but for me the photos add a lot of colour to what Sargent is saying and the hand waiving points me in the direction of the salient concepts to really hone in on. I can't remember if you waved your hands a lot during lecture David... but I learned a ton regardless. Cheers P (aka Frank)

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